What can I claim GST back on?

A common question from small business owners is “What can I claim GST back on?”. The answer is important, because once you’ve paid GST in your business supply chain, you can then claim GST back on many of your business expenses.

Understanding GST claims and returns is an integral part of doing business in New Zealand. To work out what you can claim back, there are a few details to go through to ensure you’re earning a GST return.

How to claim GST

So how do you go about claiming GST? 

The Inland Revenue Department (IRD) handles all GST claims in New Zealand.

You can either use your accountant or advisor’s services to claim GST or you can claim GST yourself online through your myIR account.

To claim back GST from the IRD that you’ve paid in the course of your business activity (or taxable activity), you must show records of your business-related purchases and expenses that were used in the operation of your business.

At the same time, you need to submit records relating to how much GST your business charged customers or clients. 

The difference between GST paid and GST received will determine whether you owe the IRD GST or whether you receive a refund.

GST returns

The process of claiming GST hinges on your GST return to the IRD. This either occurs every two months or every six months.

When you register for GST with the IRD, you’ll be given a choice around return periods. 

When you file these GST returns with the IRD according to your chosen period, you’ll then be able to claim back the GST your business has paid.

Claiming GST on business expenses

As a small business in New Zealand, claiming GST on business expenses is a common activity. The GST component of most expenses your business incurs while running its operations can be claimed back from the IRD.

Here are some rules around claiming GST:

• When claiming GST credits from the IRD, your small business needs to show proof that the goods or services you bought were used for business related purposes.
• It must be clear that the business expenses you incurred included GST in the price in the first place and that both yourself and your supplier are registered for GST.
• When claiming GST from the IRD, you must be able to show tax invoices from your suppliers that clearly indicate GST paid.
• To claim GST, you must have already paid these invoices, or are liable to pay them.

As a small business, what can you claim for?

As a small business in New Zealand, there are rules around what you can and can’t claim for. 

When you make a business-related purchase that is integral to your taxable business activity, and both you and your supplier are registered for GST, you can go right ahead and claim those expenses.

For example, if you sell coffee from a stand, you may purchase items such as cups, beans, napkins etc. These items may contain GST in their prices. If they do, you may claim for the GST portion of these expenses.